Why Local Governments Need to Care About Municipal Finances

 LPSI News posted by Administrator
 January 10, 2015

World Bank - June 2014 - There is a huge gap in cities between the needs of citizens and the resources available to help them. Today, more than 3.5 billion of the world's people live in cities. This is why it is very important for cities to look for savings, prioritize their expenditures, and focus on the frontier issues facing them. The task of getting municipal finances right is urgent and daunting, but eminently reachable.

At the launch of their recently published book, Municipal Finances, A Handbook for Local Governments, Catherine Farvacque-Vitkovic and Mihaly Kopanyi emphasized the practical lessons for municipalities on managing their finances.

Municipal officials are not only dealing with the day-to-day management of the city, but they also have to increasingly address issues of social inclusion, local economic development, job creation, crime and violence, climate change and natural and man-made disasters, to name a few. They are also expected to welcome increasing numbers of people moving into their cities and to deal with an increasing number of informal settlements. This municipal agenda comes with a very high price tag.

Municipalities have to find the resources needed to meet this challenging mandate, and there are no quick solutions, no one size fits all. Therefore, getting finances right is crucial for the success of cities and indeed national governments.

Citizens interface with government mostly at the local level, and are in fact, the face of government to a large part of the population. Therefore, if municipal services are effective, this builds the citizens' trust in their government as a whole. Services affect the quality of life, which is important to citizens, and the efficiency and productivity of urban areas are important and key to national growth overall.